A good decision analytics can make or break your loan management application success and to avoid that one can use Little’s law
Nowadays many retail or commercial banks use Loan Management System (LMS) as their core banking solution. This LMS is usually a complex product ecosystem, and its success would rely on its performance or faster response time. Here, Mr. John Little’s Law, which is mainly used in the production industry, can be handy to measure the mean response time of your product ecosystem and adjust the individual system attributes accordingly.
Renowned Massachusetts Institute of Technology (MIT) professor named John Little developed this theorem, Little’s law, that states the average number of items within a system (L) is equal to the average arrival rate of items (λ) in and out of the system, multiplied by the average amount of time an item spends in the system (W). To put it in an equation it is L= λW. Little’s law finds its application as a basic discipline of any queueing theory of mathematical probability.
In the case of LMS, no matter what product/application that you are using for your unified loan management system, the utmost important component is Credit Assessment and Decision Analytics is the heart of Credit Assessment. Many LMS use their own or liaise with third-party Credit Assessment solutions for making their loan decisions accurate. By accurate loan decisions what I mean is; if you missed a single attribute in your Decision Analytics algorithm, you would lose a potential customer owing to an inadequate credit assessment solution.
Let’s simplify Little’s Law for our Decision Analytics purpose. We use the lean/agile terms as Lead Time which is Work In Progress/Throughput or W = L/λ. That means in real-time decisions, the Lead Time will be smaller when WIP decreases or the Throughput increases.
I have used Little’s law in the Decision Analytics Algorithm and it fits and works perfectly well. The beauty of Little’s law is in the simplicity of it. Try to apply it to your product, as it will help your product processes to optimize the lead time. Once you embrace Little’s law, you will see your product from a different lens and can spot opportunities to improve its overall performance.
Expertise Deployments in Salesforce, ERP, CRM, Web & Mobile Developments, Artificial Intelligence, Data Management & Resource Augmentation.
Our team will get back to you at the earliest to book a requested demo call at your preferable time.
Back to Website
